The Obamacare trap
Last week’s release of Congressional Budget Office numbers showing that Obamacare is projected to decrease employment by 2.5 million jobs has, by now, been litigated almost to the point of meaninglessness. On the one hand, liberals have advanced the less-than-plausible argument that the numbers are a blessing in disguise, because they show that people are taking more time off from jobs that are presumptively a waste of time. It need not be said that this is probably an overly optimistic read.
Yet conservatives have fared little better, as they have jumped from argument to argument, seemingly determined to miss the only good one. First, there was the convenient but incorrect reading of the CBO score, which claimed that Obamacare was killing jobs, when, in fact, the score had nothing to do with employers cutting back open positions. When this collapsed, conservatives instead responded by claiming that the law was turning Americans into slackers, who would opt out of working, thus slowing down economic growth and living off the largesse of their productive brethren.
Needless to say, this skews dangerously close to the “47 percent” argument that did a great deal to sink Mitt Romney’s campaign in 2012. Except unlike the 47 percent point, which assumed that people who didn’t pay taxes were the leeches, this one instead pretends that working 40 hours a week is the dividing line between leeches and good, patriotic Americans. One presumes that those making this argument have nothing against Americans who reduce their working hours in response to investment income, or coming into a large inheritance, or being so efficient that they don’t need eight hours a day to accomplish all that can be accomplished in that day. Work is an instrumental good, meant to be aimed at what Arthur Brooks calls earned success, not a positive duty to be undertaken even in the teeth of economic rationality.
The liberal opposition point may go too far, but even so, extolling working long hours for its own sake, rather than for the purpose of growing one’s career or improving one’s lot in life, runs dangerously close to the sort of “working class” rhetoric one hears from unions.
And fortunately, many conservatives and libertarians get this, the most eloquent of which so far is Tim Carney of the Washington Examiner, who smartly observes:
Here, though, the right goes too far in the hubbub about the CBO report. Remunerated work is not the highest good. Just because a policy induces people to quit the labor force doesn’t make that policy bad. And just because people exit the work force or significantly cut back their hours doesn’t make them slackers.
Sure, it’s bad if a policy ends up paying able-bodied people to sit on their couch and play Xbox, but we don’t know if that’s what Obamacare’s insurance subsidies will do…
If a low-income mother is working – and paying through the nose for childcare – just because her job has insurance and her husband’s job doesn’t, then the family’s lot is improved by a policy that makes it easier for them to afford insurance outside of work, enabling her to stay at home with their children.
This much is pretty much irrefutable. However, it behooves us to quote Carney on one other point, which while somewhat well-taken, offers us a glimpse of the truly devastating flaw which the CBO’s analysis exposed. Carney:
Or imagine a young employee at a tech company. He’s itching to get out and launch his own startup, but he stays in his job because he needs the insurance. This is bad for him, and bad for the economy deprived of his innovation.
Now, Carney is correct that the pre-Obamacare situation puts this tech worker in a suboptimal position. But does the post-Obamacare one improve his lot? On that, we have to agree to disagree. You see, while Obamacare does probably offer at least some stifled creative people and/or single parents a way out of their imprisonment, it also locks them into a less noticeable, but no less pernicious jail. What this is was explained by Glenn Kessler in his fact-check of the initial conservative response to the CBO score:
One big issue: the health insurance subsidies in the law. That’s a substantial benefit that decreases as people earn more money, so at a certain point, a person has to choose between earning more money or continuing to get the maximum help with health insurance payments. In other words, people might work longer and harder, but actually earn no more, or earn even less, money. That is a disincentive to work. (The same thing happens when people qualify for food stamps or other social services.)
Got that? The disincentive to work in Obamacare is exactly the same as the disincentive in food stamps and other social services – namely, that at a certain point, the means-tested part of the policy makes it literally detrimental to one’s economic health to achieve full independence from the state. Better to hover under the acceptable level of income than risk unsustainable costs. In other words, even if someone wanted to work their way out of poverty, it might be too expensive to lose the subsidies that poverty provides.
This isn’t a point that’s foreign to the right. Star Parker, for one, is fond of making it, using her own life story as an example, which Rand Paul cited in his State of the Union response.
So that would-be entrepreneur that Carney mentions might actually face a bigger hurdle in a post-Obamacare world: Namely, that at a certain point, growing his business might put him in a financially unsustainable situation, even if it made the business able to hire more people and take off. Fortunes like Mark Zuckerberg’s aren’t built in a day, and the luxury to found a startup in one’s college dorm room is far from universal. What if the next Zuckerberg stops short of expanding as far as he could, because he’ll be caught between Obamacare’s tax penalties and the inability to afford health insurance without its subsidies?
In a world where politically motivated means tests are a fact of life, this problem can’t be ignored, and nor can it easily be fixed. Doing away with means tests altogether, as some liberals would like, is a blank check for rabid fiscal irresponsibility, while making them more draconian only compounds the problems discussed here. Yet as Ronald Reagan said, perhaps there is a simple answer: Not easy, but simple.
And maybe, just maybe, that simple answer is to stop trusting Washington to decide who gets a hand up from the state, and who, upon crossing over a certain income threshold, gets slapped back in line by the same hand. In other words, sometimes whether people work or don’t work is best left to the invisible hand of the market, rather than the iron fist of government.
